Federal and state securities laws prohibit the purchase or sale of a public company's securities by persons who possess material information about that company that is not generally known or available to the public. These laws also prohibit persons who possess Material Non-Public Information (as defined in Section E below) from disclosing this information to others who may trade. This Policy provides guidelines to employees, officers, directors, consultants and contractors of Compass Diversified Holdings ("Holdings"), Compass Group Diversified Holdings LLC (the "LLC"), the majority controlled subsidiaries of LLC (the "Portfolio Companies"), and Compass Group Management LLC (the "Manager") with respect to transactions in securities issued by Holdings and also contains restrictions on the communication of information they may learn during the course of employment with or other services performed on behalf of Holdings, the LLC, the Portfolio Companies or the Manager.
Violations of laws relating to insider trading may be punished by criminal penalties (including prison sentences) and civil penalties. In addition, officers and employees of Holdings, the LLC, the Portfolio Companies or the Manager who violate this Policy shall be subject to disciplinary action by the companies, which may include termination of employment or ineligibility for future participation in their equity incentive plans. The Securities and Exchange Commission (the "SEC"), stock exchanges and the New York Stock Exchange use sophisticated electronic surveillance techniques to uncover insider trading. The SEC and the Department of Justice pursue insider trading violations vigorously. Cases have been successfully prosecuted against trading through foreign accounts, trading by family members and friends and trading involving only a small number of shares.
Please note that other policy statements in effect at the LLC, the Manager and the Portfolio Companies also require you to protect proprietary information and contain restrictions on unauthorized disclosure of information, including, for example, the Codes of Ethics of the LLC and the Portfolio Companies.
In this Policy, we refer to securities issued by Holdings as "Covered Securities." In addition, we use the term the "Companies" when we want to refer to and we refer to Holdings, the LLC, the Portfolio Companies and the Manager and all of their respective subsidiaries. We sometimes refer to employees (including part-time and temporary employees), officers, directors, consultants and contractors of the Companies as "Covered Persons." This group of people, members of their immediate families, and members of their households are sometimes referred to in this Policy as "insiders."
This Policy applies to:
Under this Policy, an insider may, from time to time, have to forego a proposed transaction in Covered Securities even if he or she planned to make the transaction before learning of the Material Non-Public Information and even though the insider believes he or she may suffer an economic loss or forego anticipated profit by refraining from trading. Please note that, regardless of the Company at which a Covered Person is employed, this Policy applies to transactions by the Covered Person in all of the Covered Securities issued by Holdings.
The principles described in this Policy also apply to Material Non-Public Information relating to other companies, including the customers and business partners of the Companies, when that information is obtained in the course of employment with or other services performed on behalf of, the Companies. Civil and criminal penalties, and termination of employment, may result from trading on inside information regarding the customers or business partners of the Companies.
Members of the Board of Directors and executive officers of each of the Companies must also comply with the reporting obligations and limitations on short-swing transactions set forth in Section 16 of the Exchange Act. The practical effect of these provisions is that directors and executive officers who purchase and sell Covered Securities in certain transactions within a six-month period are required to disgorge all profits to the applicable public company whether or not they had knowledge of any Material Non-Public Information. Under these provisions, and so long as certain other criteria are met, neither the receipt of an option under an option plan, nor the exercise of that option, nor the receipt of stock under an employee stock purchase plan will be deemed to be a purchase under Section 16; however, the sale of any such shares will be deemed to be a sale under Section 16. Moreover, no director or executive officer may ever make a short sale of Covered Securities. In addition, sales of Covered Securities by directors and executive officers are required to be made in accordance with Rule 144 under the Securities Act of 1933, as amended.
The Compliance Officer is authorized to interpret this Policy on behalf of Holdings, the LLC and the Manager and to apply its terms to specific situations in which questions arise. In addition, the Compliance Officer is authorized to amend this Policy from time to time.